Last Friday, the market sold off as the University of Michigan Consumer
Sentiment report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.
The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war. This could lead to a relief rally and the technical levels can help in
identifying the likely entry and exit points.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq
Composite last Friday fell into the upward trendline where we
have also the confluence with the
red 21 moving average. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for another rally into the major downward trendline
around the 13800 level.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see more closely the support zone
around the 13370 level where we have further confluence from the red 21 moving
average, the 50% Fibonacci retracement level
and the previous resistance turned support. This is
a very good level for the buyers to position for a rally. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will likely pile
in even more aggressively to extend the drop into the lows and target a
complete breakdown.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see that more
conservative buyers might want to wait for the price to break above the counter-trendline
to join the rally into the major downward trendline, while the sellers could
use it to target the break below the 13370 support with a better risk to reward
setup.
Upcoming
Events
This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.